We know the company's equipment works well. We know that in an operating room, the equipment reduces the number of costly side effects. We know there is no real competition. We know that the surgeons who use the equipment swear by it. We know that the type of surgery that can effectively use this equipment continues to grow. We know all of the equipment is FDA approved. We know that the use of the equipment reduces costs and therefore fits well with Obamacare. We know that recent trial results continue verify the utility of the equipment. Imho, there is only one outstanding risk. Will the substantial marketing costs associated with the development of their own salesforce be more then off set by increasing sales and usage. We are in the midst of that risk right now and throughtout the rest of 2013. If the company successfully implements the selling effort, 2014 is going to begin a period of rapidly growing profits. One last point. We also know that this company has a very,very competent management team.
There is some near-term valuation risk - this is an unprofitable company trading at over 10-times next year's revenue estimate (which I think they will blow away), so the valuation has already taken into account the huge growth prospects down the road. As noted in the JMP presentation, their current procedure run rate is ~20,000 annually and they are targeting potential procedures of 1M-2M annually, so we are barely getting started. Since the near-term (i.e. next 2-3 quarters) procedure/revenue growth may not rise as exponentially as some hope, there is a chance the stock pulls back. The hyper-growth period will be over the next 2-5 years - the question is how much of that growth will be priced into the near-term valuation?